By Nick Fortuna, The Wall Street Journal featuring Nick Strain, CFP®, CPWA®, AIF®, Senior Wealth Advisor at Halbert Hargrove

Helping a loved one pay off debt or paying for a bucket-list vacation for older relatives are just two options that gift givers might want to consider

U.S. consumers entered this holiday season planning to spend an average of $654 on gifts, with the likeliest purchases going to gift cards, vacation and travel, and toys and games, according to the Conference Board Holiday Spending Survey.

Instead of giving these traditional gifts, wealth advisers say a financial-related gesture or present might be the best gift of all—the one that keeps on giving. Even small financial gifts can help to position young people for success or help seniors to enjoy their retirement, financial advisers say.

Here are some of their financial gift ideas, broken down by age.


Contributing to a “529” education-savings plan, or a qualified tuition program, for a child or grandchild is a good gift option because those after-tax contributions grow tax-free, and distributions are tax-free as long as the money is used for the beneficiary’s qualified education expenses, financial advisers say.

And if the recipient decides not to go to college or doesn’t need the 529 for other education expenses, the contributions can jump-start retirement savings.

Before the Secure 2.0 Act was signed into law a year ago, most withdrawals from 529 plans for anything other than qualified education expenses were subject to income tax and a 10% penalty. However, the new law allows owners of 529 accounts—typically parents and grandparents—to roll over money that isn’t spent on education into a Roth individual retirement account for their child or grandchild.

This eliminated one of the main potential drawbacks of a 529 account—the possibility that the beneficiary won’t pursue higher education, says Dean Catino, president and co-founder of Monument Wealth Management in Alexandria, Va.

Owners of 529 accounts may now roll over a lifetime limit of up to $35,000 into a Roth IRA for the designated account beneficiary. Rollovers are subject to the annual cap on Roth IRA contributions, which is $7,000 in 2024 for people under the age of 50.

Some limits apply. The 529 plan must have been established at least 15 years before the rollover, for example, and any contributions within the past five years can’t be rolled over.

Alternatively, a 529 account owner could change the beneficiary to another child who likely will have education expenses.


Contributing to a 529 plan is an option for older children, but with the college years drawing nearer, the money won’t have much time to grow. Instead, consider custodial brokerage accounts for teenagers, exposing them to basic principles of long-term investing, Catino says.

Through a custodial account, teenagers can learn about the importance of building their investments over time, regardless of how the market is performing, says Derek Miser, chief managing partner of Miser Wealth Partners in Knoxville, Tenn.

“That educational piece, introducing teenagers to investing, is a valuable gift,” he says. “Financial responsibility and the power of compound interest is something everybody should learn earlier in life rather than later, and since they are young, they can handle the volatility of the stock market.”

When it comes time to apply for financial aid, however, custodial bank and brokerage accounts are considered assets of students and might affect their eligibility for aid, says Jaime Eckels, partner at Plante Moran Financial Advisors in Auburn Hills, Mich. Conversely, a 529 plan for a student is considered an asset of the parent on the Free Application for Federal Student Aid, and 529 plans owned by grandparents and other nonparents don’t affect aid eligibility, she says.

Young adults

Expenses such as student loans and rent leave many young adults with little to save for retirement, even if their jobs encourage them to save through matching 401(k) contributions. To get the ball rolling, parents or grandparents could open a Roth IRA for a young professional and pledge to match that child’s contributions, up to the $7,000 annual cap for 2024, according to Nick Strain, senior wealth adviser at Halbert Hargrove in Long Beach, Calif.

Matching contributions give grandparents and parents an opportunity to discuss their lifelong investment strategies and experiences with their adult children, he says.

“I think the gift is important, but you also can talk about what you’ve learned over the years,” Strain says. “Putting those two pieces together makes it more personal.”

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